LEXTAL partner and attorney-at-law Kristi Sild is an experienced expert in employment law. She explains how an employer is required to compensate for damages in the event of a work accident and how to declare the paid compensation.
Is compensation for a work accident always required to be paid to the employee (whether due to the employee’s negligence or the employer’s negligence)?
The employee is entitled to compensation for health damage caused by a work accident per the extent prescribed in the Law of Obligations Act (LOA § 14 (5) point 6). Generally, suppose the employer has violated their occupational health and safety obligations. In that case, the employee has the right to claim compensation for the expenses arising from the health damage and non-pecuniary damages resulting from the work accident. In a court dispute, the court also considers the employee’s contribution to the occurrence of the damage. Suppose the work accident occurred partially due to the employee’s negligence or disregarding safety measures (e.g., failure to use prescribed personal protective equipment). In that case, the court may reduce the compensation proportionally to the extent that these circumstances or risks contributed to the damage.
How is this compensation calculated, and how should it be declared in the Tax and Customs Board (TCB)?
Compensation for health damage resulting from a work accident or occupational disease is declared as employment income. It is subject to income tax unless it is paid as an insurance benefit.
When should the compensation be paid to the employee?
The compensation is paid out under the agreement reached with the employee or in compliance with a court decision.
How is the calculation of the health insurance compensation conducted?
The Health Insurance Fund pays temporary incapacity compensation to insured persons of 100% of the average income per calendar day for each day of illness or injury caused by an occupational disease or work accident (Health Insurance Act § 54 (1) point 6). Furthermore, the Health Insurance Fund has the right to recover from the employer the difference between the compensation paid by the employer in the amount of 100% and the compensation calculated at the usual rate of 70% in the event of a work accident (Health Insurance Act § 62 (5)).
Source: Äripäeva teabevara nõuandekeskus: https://teabevara.ee/nouandekeskus